We have experimentally verified a new idea for 40 Gbit/s wavelength conversion within the 1.5 microm band based on sum-frequency generation (SFG) in a periodically poled LiNbO3 waveguide. The spectrum and the temporal waveform of the output pump reveal that the input cw pump is converted to an optical pulse during SFG. Not only wavelength conversion but also a logic NOT gate at 40 Gbit/s are experimentally observed.